Global Payments stock falls as 'surprise' CEO transition overshadows earnings beat
By Emily Bary
Timing of CEO change 'seems very abrupt,' analyst says
Shares of Global Payments Inc. were sliding nearly 7% in Monday trading after the payment-technology company said that Chief Executive Jeff Sloan plans to step down from his role as of June 1.
Sloan will also depart Global Payments' (GPN) board of directors at that time. He'll be succeeded by Cameron Bready, the company's chief operating officer, who plans to join the board once he takes over.
"While investors were caught a bit off guard by the CEO move, we continue to see GPN as a high-quality, undervalued asset," Barclays analyst Ramsey El-Assal wrote in a note to clients.
He added that while the timing of the announcement was "unexpected," Global Payments "has likely been planning this for some time, given Mr. Bready's tenure with the company."
Bready has been with Global Payments since 2014, and has been the president and COO since 2019.
Despite Bready's history at Global Payments, the CEO change "seems very abrupt," Mizuho analyst Dan Dolev told MarketWatch, given that Sloan will leave in a month. He wonders if the move is intended to stave off activism; Global Payments shares have lagged the S&P 500 meaningfully over one-, two-, and three-year spans.
Chief Executive Jeff Sloan said on the earnings call that the timing was right for the company "to execute on our succession plans" as Global Payments recently closed on three strategic transactions, posted a beat-and-raise quarter and has "healthy" businesses.
"On CEO transition -- on one hand, the timing is understandable given the completion of big strategic items for the company," Bernstein's Harshita Rawat wrote in a note to clients. "On the other hand, the transition time (1 month) feels very short and there wasn't much clarity provided by the company regarding future plans for Jeff Sloan."
The leadership transition seemed to outweigh Global Payments' first-quarter results, which also came out Monday. The results on their own may have helped send the stock up 3% to 5%, Baird's David Koning wrote in a report, though he acknowledged before the start of trading that the CEO change "could temper the move today."
Global Payments posted a first-quarter net loss of $11 million, or 4 cents a share, whereas it generated net income of $245 million, or 87 cents a share, in the year-earlier period. For the latest quarter, Global Payments recognized a $245 million loss on business dispositions that impacted net income.
On an adjusted basis, Global Payments earned $2.40 a share, up from $2.07 a share a year before, while analysts were modeling $2.31 a share.
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GAAP revenue rose to $2.29 billion from $2.16 billion a year earlier, whereas analysts had been expecting $2.10 billion.
Global Payments now anticipates $8.635 billion to $8.735 billion in adjusted net revenue this year, up 7% to 8% from a year before. The company's prior outlook implied 6% to 7% growth. Global Payments also expects $10.32 to $10.44 in adjusted earnings per share, up 11% to 12% from a year before. Its earlier forecast implied 10% to 11% growth.
-Emily Bary
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May 01, 2023 12:33 ET (16:33 GMT)
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